Banking & Finance

VietinBank brings Saigon Bank holding down to 5%

VietinBank has auctioned 16,875 million shares in Saigon Bank to unidentified individual investors for some VND211 billion ($9.4 million).

Ms. Tran Thi Thanh Nga, Head of Communications at VietinBank Securities, confirmed the sale with VET but did not reveal the buyers.

"The deal aimed to reduce the bank’s ownership down to 5 per cent, or 15.12 million shares," Ms. Nga said.

The sale was equal to about 5.48 per cent of the 29-year-old bank. VietinBank’s holding is now cut from 10.39 per cent to 4.91 per cent.

The shares were sold at VND12,500 ($0.58) each against an initial price offering of VND10,800 ($0.5).

A total of ten individual investors registered for the auction, with no institutional investors registering. The amount of shares registered for purchase totaled 67.5 million.

Saigon Bank has charter capital of nearly VND3.1 trillion ($140 million), in which VietinBank’s stake post-auction stands at approximately VND151 billion ($7 million) with a par value of VND10,000 ($0.45) per share.

The auction is in compliance with the State Bank of Vietnam’s Circular No. 36 regulating limits and prudential ratios in the operations of credit institutions and foreign bank branches, a representative from VietinBank explained.

Circular No. 36 states that commercial banks can hold a 5 per cent stake in no more than two other financial institutions. Other banks that are yet to comply with the Circular are Vietcombank, Eximbank and ABBank.

Vietcombank has stakes in four banks and one financial institution, holding more than 5 per cent in three of them. Eximbank has stakes in four banks and institutions, with 8.76 per cent in Sacombank, while ABBank has 8.4 per cent of EVN Finance.

VietinBank is Vietnam’s third-largest bank in terms of total assets, with VND792 trillion ($36 billion) as at the end of March 2016, according to its financial report for Q1 2016.

It has three foreign shareholders, with the Bank of Tokyo-Mitsubishi UFJ holding 20 per cent, the International Finance Corporation (IFC) 2.63 per cent, and the IFC Capitalization (Equity) Fund 5.39 per cent.

VietinBank and BIDV are currently at the center of a controversy about repaying dividends in 2015 to the State budget. While BIDV plans to pay the dividends in shares and VietinBank wants to hold on to the dividends for re-investment, the Ministry of Finance (MoF) wants to collect dividends in cash for the State Bank of Vietnam to cover the State budget deficit.

Saigon Bank has a total of 35 branches and 56 transaction offices throughout the country.